The UK Competition and Markets Authority (CMA) expressed concerns about the potential for artificial intelligence (AI) foundation model (FM) developers to dominate markets and limit resources for other businesses in its initial Report on AI Foundation Models. The report scrutinizes the development and use of data-driven systems capable of producing varied outputs, with specific concerns surrounding FM developers who hold substantial market power.
The CMA's report warns that such powerful developers might control downstream markets, thereby inhibiting non-FM businesses from generating profits. It also addresses the risk faced by FM developers of being deprived of essential competitive resources like computational capacity.
The report anticipates increased UK merger control and antitrust enforcement, referencing both the forthcoming UK Digital Markets, Competition and Consumers (DMCC) Bill and the EU AI Act. These legislative measures are expected to address issues such as entrenched market power, access to proprietary data, computing power, and first- and early-mover advantages.
The CMA underscored the role of open-source FMs in fostering a diverse range of business models and promoting consumer choice. It also highlighted economies of scope and the barriers to switching between FMs as significant factors influencing competition in this space.
In an effort to ensure fair competition, the CMA has proposed principles such as accountability and diversity of business models. It also anticipates increased enforcement of merger control to curb the dominance of powerful FM developers. The watchdog's report underscores the importance of a level playing field in the rapidly evolving AI sector, indicating a potential regulatory shift towards more stringent oversight of AI development in the UK.
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